Key Moments
- Bank of America raised its Intel price target to $96 from $56 while reiterating an Underperform rating.
- BofA estimates a potential Apple foundry deal could reach about $10 billion in annual sales for Intel by 2030.
- Intel shares jumped 14% to a record close of $124.92, pushing year-to-date gains to nearly 240%.
Apple Foundry Deal Prospects Drive New Target, Not Rating
Bank of America increased its price objective on Intel stock to $96 from $56 but kept an Underperform recommendation in place. The firm argued that expectations for a possible foundry partnership with Apple are already embedded in Intel’s share price, limiting further upside.
The Wall Street Journal reported that Apple and Intel have reached a preliminary understanding for Intel to produce certain chips used in Apple devices. Based on an assumed 25% share of Apple’s chip volumes, BofA projected that such an arrangement could ultimately contribute roughly $10 billion in annual foundry revenue for Intel by 2030.
Stock Rally and Valuation Framework
Intel’s stock climbed 14% on Friday, finishing at a record closing level of $124.92. This move extended the company’s year-to-date advance to nearly 240%, underscoring the market’s enthusiasm around its foundry ambitions and broader growth prospects.
According to BofA, the upward revision in its price target reflects a shift to a new sum-of-the-parts valuation methodology and a more optimistic view of the server CPU market. The bank now forecasts that the server CPU market will reach $120 billion by 2030, up from its earlier projection of $80 billion.
| Metric / Assumption | Previous View | Updated View |
|---|---|---|
| Intel price target (BofA) | $56 | $96 |
| Server CPU market size by 2030 | $80 billion | $120 billion |
| Estimated Apple foundry sales for Intel by 2030 | Not stated | ~$10 billion annually |
Potential Product Scope With Apple
In the nearer term, BofA viewed Apple’s M-Series chips used in MacBooks and iPads as the most probable initial products to be manufactured by Intel under a prospective deal. Over time, the relationship could expand to cover A-Series processors used in iPhones.
“While discussions are likely still ongoing, we believe this is related to earlier INTC management commentaries that Intel Foundry is engaged with customers to manufacture ARM-based processors (such as Apple SoCs),” BofA analysts led by Vivek Aryas said.
Execution Risks and Margin Pressure
The BofA team stressed that it has not yet embedded the potential Apple contract into its formal financial model, awaiting more detailed information on the agreement’s structure and terms. The analysts also pointed out that even after any official announcement, a ramp would not be immediate, as it would require two to three years for capital expenditure deployment, facility qualification, and production scaling.
During the early phase of such a foundry project, BofA anticipated that Intel’s gross margins would come under pressure. The analysts cited depreciation, low yields, and startup-related costs as likely headwinds. They added that Intel’s objective of achieving operating breakeven for its foundry business by 2027 “could be delayed by another one to two years.”
Preference for AMD and ARM Peers
Despite acknowledging the potential of the Apple relationship and the upgraded industry outlook for server CPU total addressable market, BofA maintained a cautious stance on Intel’s relative positioning.
“We acknowledge the potential opportunity and alongside the recent increase in industry server CPU TAM outlook…However, we reiterate Underperform as we believe these upsides are already fully valued, and we believe CPU peers AMD/ARM are better positioned to benefit (share gainers) of the rising TAM,” the analysts wrote.
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